Operational Management Flashcards
What is the operation management function?
The operations function might be thought of as undertaking the following core roles:
- Operations: Responsible for fulfilling customer orders and requests through production of the goods or services, and for delivery of products or services to the customer.
- Marketing and sales: Responsible for identifying customer needs and communicating information about the organisation’s products or services to customers so as to procure sales orders.
- Product and service development: Responsible for designing new products and service that will meet customer needs, to generate sales orders.
What is the transformation process model?
- Transformed resources are manipulated and formed into a different condition by the process (materials, information or customers themselves)
- Transforming resources are the resources that are used to alter the condition of the transformed resources (the workforce of the organisation and the facilities such as buildings, equipment and vehicles)
What are the 4 V’s of Operation?
- Volume: The volume of units produced. High volume usually means capital intensive; low volume usually means labour intensive
- Variety: Whether the operation handles a number of different inputs or produces a range of different outputs
- Variation in demand: Demand for same operations may be seasonal or regular peaks and dips in demand may be experienced
- Visibility: The degree to which business operations are visible to the customer
What is the value chain theory created by Porter 1985?
The value a business adds arises from a collection of outcomes, not from activities and processes. It suggests that an organisation is a series of integrated components the focus of which is to deliver value throughout the organisation to the customer.
In the Value Chain, what is the difference between business functions and business activities?
- Business functions are the familiar departments of a business (for example production, HR, the finance function etc.) and reflect the formal organisation structure and the distribution of labour.
- Business activities are what actually goes on. Activates are the means by which an organisation creates value in its products, sometimes referred to as value activities. Activities incur costs and provide a product or service which earns revenue.
In the Value Chain what is the difference between primary and secondary activites?
What other types of activity are there?
Primary Activities
- Inbound logistics: activities involved with receiving, handling and storing inputs to the production system
- Operations: activities which convert resource inputs into a final product
- Outbound logistics: activities relating to string the product and its distribution to customers
- Marketing and sales: activities that relate to informing customers about the product, persuading them to buy it, and enabling them to do so
- After-sales activities: installing products, repairs and providing spare parts
Support Activities
- Procurement: activities which acquire the resource inputs to the primary activities
- Technology development: activates are related to bot product design and to improving processes and/or resource utilisation
- Human resource management: recruiting, training, developing and rewarding people
- Organisational infrastructure: planning, finance, quality control and management
Also
- Direct activates: concerned with adding value to inputs
- Indirect activates: e.g. maintenance, sales force and administration
- Quality assurance: monitors the quality of activities, and includes inspection, review and audit
How can a Value System be used to an organisations advantage?
A company can create competitive advantage by making the best use of its value system. E.g. a just-in-time system where there is close integration of the organisation
What is the rationale for using closer supply chain links?
- Shorter product life cycles requiring more efficient supply pipelines
- Increasingly global supply chains requiring greater coordination
- A move towards more flexible organisations that partner with others (organisational integrations)
- More demanding customer service standards
What types of relationship are there between supplier and company according to Porter?
Opportunistic relationship: low level of co-operation between the supplier; versus
Collaborative relationship: high level of co-operation between customer and supplier
What is a supply chain network?
A supply chain network is an interconnecting group of organisations which relate to each other through linkages between the different processes and activities involved in producing products/services to the ultimate consumer.
What is an Integrated Supply Chain Model?
The aim is to co-ordinate the whole chain, from raw material suppliers to end customers. The chain should be considered as a network rather than a pipeline, a network of vendors support a network of customers, with third parties such as transport businesses helping to link the companies.
What are the Implications of Supply Chain Management?
- Reduction in customers served. For the sake of focus, companies might concentrate resources on customers of high potential value
- Price and inventory co-ordination. Businesses co-ordinate their price and inventory process to avoid problems and bottlenecks caused by short-term surges in demand, such as promotion
- Linked computer systems. Closer links may be facilitated through the use of electronic data interchange (EDI), for example to allow paperless communication, billing and payment through the use of a computer extranet
- Early supplier involvement in product development and component design
- Logistics design. Hewlett-Packard restructured its distribution system by enabling certain product components to be added at the distribution warehouse rather than at the central factory
- Joint problem solving
- Suppliers may be represented on site
Why Offshore and what may it involve?
The most common reason for offshoring is to make cost savings by taking advantage of lower labour and/or other costs.
Offshoring may involve:
- Locating a department (such as the finance department) in another country
- Using an external company based in another country (referred to as ‘offshore outsourcing’)
- Near-shoring – a form of offshoring where a department is relocated to a country within the region of the business
What are The challenges of offshoring?
- Risks associated with currency exchange rates and political and economic stability of the offshore country
- Loss of skills and jobs in the home country
- Exercising control from a distance and security of sensitive information
- Cost savings and efficiency improvements may be slow to accrue of may not be realised at all
- Dealing with cultural, time zones and language differences
Why Outsource?
Outsourcing of non-core activities has the potential to achieve important cost savings. Outsourcing strategic or core competences can lead to loss of competitive advantage and risks the collapse of the whole organisation.
- Potential for competitive advantage
- Where strategic risk is high, or where an organisation is vulnerable, the activity should be kept in-house. However, where strategic risk is low and the need for flexibility is high, then the activity should be outsourced on a short-term contract
- Transaction costs
What supplier sourcing strategies are there and what are their relative advantages and disadvantages?
